Can Data Make Medicare Healthier?

Yesterday, the Centers for Medicare & Medicaid Services (CMS) made public a huge amount of Medicare payment data. Prior to the release, Nicholas Bagley explained what the information entails:

CMS will publicly release comprehensive data on physician billing practices in Medicare, including information about specific, identifiable doctors. The move is controversial: the AMA, for one, is “concerned” that the data “will mislead the public into making inappropriate and potentially harmful treatment decisions and will result in unwarranted bias against physicians that can destroy careers.” And I’ll bet a few doctors in Miami, with its extraordinary rate of Medicare spending, are sweating bullets.

One possibility is that releasing the data shames some providers into more responsible behavior.

As Amitabh Chandra, an economist and professor of public health at Harvard, suggested, fear of bad publicity might cause some higher-charging doctors to cut back on their reimbursements. And while individual consumers are unlikely to spend much time investigating doctors, professional researchers in the media and in academia will.

In fact, they already are. Initial reporting from the Wall Street Journal indicated that the top 1% of providers accounted for 14% of Medicare billing, with ophthalmologists making up roughly one-third of the top 1,000 billers. A report from the Department of Health and Human Services’ inspector general argued that the agency should scrutinize that specialty more closely, and this data shows why.) The New York Times on Wednesday reported that two Florida physicians who had the highest Medicare reimbursements in the country were also generous donors to the Democratic Party. CMS hopes to encourage more such investigating, and not just from professional reporters. It has sponsored a contest for coders, calling on them to take the data and render it in a form that’s usable and interesting. The winner gets $20,000.

It’s going to take a while to fully process all this information, but a couple things stand out already from the stories that have been written so far. One is the sheer scale of the payments involved. The data set doesn’t cover anywhere close to the entire Medicare program, but it offers a look at $77 billion worth of payments to 880,000 medical professionals in the year 2012. From that group, The Washington Post notes, about 4,000 physicians billed the program more than $1 million. And a handful billed in excess of $10 million.

It won’t surprise many people that the highest billers are concentrated in the sunny state of Florida. The state has a heavy concentration of seniors. It’s also a haven for Medicare fraud. And the data suggests a possible correlation between unusually high billing and payment funny business.

A dose of Avastin costs only $50. A dose of Lucentis costs $2,000. Both Avastin and Lucentis are made by the same company, and they’re remarkably effective in treating a form of macular degeneration that was long the leading cause of blindness among the elderly, The Post reported. They are very similar on a molecular level and probably cost about the same amount to manufacture.

Nonetheless, doctors prescribe Lucentis almost as often as Avastin. They also make more money doing so. Medicare is legally obliged to pay for any drug a doctor prescribes, and doctors also receive commissions of 6 percent to cover their own expenses. The commission a doctor collects on each dose of Avastin would be only about $3, as opposed to $120 on each dose of Lucentis. Congress and the courts have refused to allow Medicare to save money by scrutinizing doctors’ decisions.

As a result, taxpayers spent about $1 billion in 2012 more than they would have if doctors had been prescribing Avastin. Avastin, for all intents and purposes, has been shown to be equivalent to Lucentis in six studies and one massive review of Medicare records.

Jason Millman asked the top 10 Medicare billers why they were paid so much money. One explaination:

Jean Malouin, a family practitioner in Ann Arbor, Mich., and the highest-ranking woman on the list, suggested her perch at No. 17 is misleading. “I am most definitely not a high volume Medicare biller!” she wrote in a email.

Malouin said that she has a small private practice but is also the medical director of an experimental University of Michigan project trying to improve care and cost-efficiency at nearly 400 clinics across the state. All the project’s claims are paid in her name, which probably explains why the data show she treated more that 200,000 patients and collected about $7.6 million from Medicare.